This story appears in the
October 2004 issue of
Entrepreneur.
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As the low-carb craze sweeps the nation, it's been blamed
for slumping Krispy Kreme sales and New World Pasta's
bankruptcy. What's a high-carb food seller to do? Stress
moderation, says Nancy Koehn, professor of business administration
at Harvard Business
School: "People are nervous about whether [low-carb diets]
make sense."
Graeter's
Ice Cream, a Cincinnati chain with annual sales of $13 million,
stresses its product's purity-carbs and all. Posting the
message "We've got carbs" outside stores, sales are
strong, says Richard Graeter, 40, co-owner and executive vice
president.
Greg Pyne, 41, is compromising at The Brooklyn
Cafe in Atlanta, which offers a pasta-heavy menu. In business
for 13 years, Pyne noticed sales, generally $1.5 million annually,
dropping off in January. So Pyne printed menus with the note
"ask your server to explain how these products can be made low
carb."
Even as restaurants and food retailers adjust, there are signs
that a backlash is brewing. The American Bakers Association and the
North American Millers' Association are launching a $4 million
to $5 million per year PR campaign with the tag line: "Bread.
It's essential." Even health-food wholesalers appear to be
distancing themselves from the hype. For example, Morningstar Farms
is running a commercial questioning whether low-carb diets are
going too far.
Brad Saltzman, who made headlines in early 2004 with his Beverly
Hills, California, low-carb grocery stores, Pure Foods, has scaled
back expansion plans and estimates 2004 sales of $1.7 million.
Saltzman, 36, noticed a 25 percent decline in February sales as
low-carb foods hit the mainstream. "Customers began shopping
at major supermarkets," he says. To boost sales, his store
changed its focus to gourmet health foods. Saltzman expects most
future growth to come from renting out low-carb vending machines,
where he doesn't face such stiff competition.